Brazil’s Nike Inc. (NKE:US) soccer jersey is selling for 35 percent off in some stores in the host nation ahead of the World Cup semifinal as many fans are buying fake versions instead.
Grupo SBF’s Centauro unit, the biggest sports retailer in Brazil with 150 stores, reduced the price of its main replica jersey by 35 percent to 149 reais ($67) late last month, according to staff interviewed in Rio de Janeiro, Sao Paulo and Belo Horizonte. Brazil plays Germany, which is outfitted by Nike competitor Adidas AG, today for a place in the July 13 final.
The initial jersey price of 229 reais -- almost one-third of the monthly minimum wage -- is prohibitive for most of Brazil’s 200 million people, many of whom are buying from a “gigantic” black market of national-team apparel, Amir Somoggi, a sports marketing consultant in Sao Paulo, said. Nike pays about $60 million to the Brazilian soccer federation for the sponsorship, according to Somoggi.
“The return for Nike on the shirt is much bigger from a branding point of view than financially,” Somoggi said, adding that it allows Nike to associate itself with star players including forward Neymar. “Most people don’t earn enough to be able to afford the shirt.”
Nike spokesman Charlie Brooks declined to comment on the terms of the pact with the federation or give sales figures. Jose Neto, a spokesman for Sao Paulo-based Grupo SBF, didn’t immediately return an e-mail seeking comment about why it reduced the jersey price by 35 percent.
On one street in Salvador, northeast Brazil, last month, Bloomberg News counted 20 stores or market stands that were selling versions of the yellow jersey that weren’t made by Nike. Joselia Braz, who was selling 30-real unbranded yellow jerseys featuring the federation’s badge, said she was selling about 200 to 300 a day.
“People don’t really care they are not the official shirts, they care about the price more,” Braz, 32, said on a recent morning.
Nike, which has made Brazil’s jersey since 1996, last year introduced a “very plain but iconic” version of the jersey for 99 reais that’s only available in Brazil, Brooks said.
“When we see counterfeit products we will always work with relevant authorities” to try and stop that, Brooks said.
Brazilian police are unlikely to go after counterfeit Brazil jersey sellers as proactively as other fake products, according to Joaquim Falcao, a professor and director of FGV Direito Rio, a law school in Rio de Janeiro.
“Imagine if the police publicly burnt national team jerseys live on television like they did a few years ago with pirated CDs and DVDs,” Falcao wrote in a blog last month. “It would damage the police’s image.”
While there’s “no way” Nike’s pact with the Brazilian federation makes money in Brazil, it has helped the Beaverton, Oregon-based company challenge Adidas’s global dominance in the $17 billion global soccer products market, according to Paul Swinand, an analyst at Morningstar Inc. in Chicago who tracks sports apparel brands.
“Without Brazil, Nike wouldn’t be anywhere near as big as they are in soccer,” Swinand said.
Nike’s Brooks said Brazil’s jersey is “by far our biggest seller” worldwide because of the romance and history of the record five-time champion team whose former players include Pele, Romario and Ronaldo.
“It’s always used to be everybody’s favorite second team and that will be rekindled with this year’s World Cup,” Brooks said.
Swinand said Nike was right to keep the premium price of jerseys in Brazil even amid counterfeiting. At a temporary World Cup stand in Brasilia airport two days ago, the jerseys were being sold at 229 reais.
“There are lots of diamonds out there but that doesn’t mean Tiffany has lost its value, people still want to buy the authentic one,” Swinand said. “The more imitations there are of it, the more valuable is the original one.”
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